November 22, 2022 23:21 GMT
Flatter On Tuesday, Cash Closed Until London
TYZ2 operates a touch above Tuesday’s late levels, but shy of the NY session top, last +0-01 at 112-20+. A reminder that today’s Japanese holiday means that cash Tsys are closed until London hours.
- Tsys firmed on Tuesday, with the major benchmarks running 2-7bp richer at the bell, as the curve bull flattened, allowing the 2-/10-Year yield spread to register another fresh extreme when it comes to the level of inversion witnessed.
- An increase in COVID-related restrictions across some of the major Chinese cities would have aided the flattening momentum.
- Elsewhere, receiver side flow in swaps seemed to aid the richening.
- A wide tail (coupled with a cover ratio that fell further below the recent average as dealer takedown moved further above its own recent average) for the latest 7-Year Tsy auction limited the bid in the immediate aftermath of that particularly offering, before fresh demand became apparent into the close.
- Looking ahead, the latest RBNZ monetary policy decision headlines the Asia-Pac docket on Wednesday.
- Further out, the minutes from the latest FOMC decision headline the pre-Thanksgiving NY docket. We will also get flash PMI data, durable goods, new home sales, MBA mortgage applications, weekly jobless claims and the final UoM survey for Nov.